Oil resumes decline in Asia ahead of USA stockpiles data

“The Saudi budget … reinforced the “lower for longer” sentiment in that market”, said analyst Augustin Eden at traders Accendo Markets, in reference to OPEC’s Saudi-backed policy of pushing oil prices lower to hurt non-OPEC producers. The American Petroleum Institute was said to report inventories rose by 2.9 million barrels.

“The imbalance in the global oil market has been diminishing in 2H15, but the hope for a rebalancing in 2016 continues to suffer serious setbacks”, the bank said, reflecting a market consensus that meaningfully higher prices are not expected before late 2016.

Crude is heading for its second annual decline amid a global supply glut that may deepen as OPEC effectively abandons output limits and Iran plans to raise production once sanctions are lifted.

USA oil stockpiles remain near levels not seen for this time of the year in around 80 years.

Oil futures slid to just under $36.50 per barrel after the U.S. Energy Information Administration said U.S. crude inventories rose by 2.6 million barrels last week.

According to the experts, if the product is sold at $38 per barrel, it would generate about $83.6 million daily or $30.51 billion in the whole year.

Expectations of a drawdown last week in USA crude inventories fed the rally. Stock markets in the energy-rich Gulf states ended 2015 in negative territory impacted by a massive decline in oil prices and regional turmoil.

The front-month in Brent LCOc1 , the global oil benchmark, was down $1.25 at $36.54 per barrel by 12:54 p.m. EST (1754 GMT), less than $1 from a 2004 low hit last week.

Crude oil futures slipped towards $37 per barrel on Wednesday as the market remained under pressure due to slowing demand and high supplies, while forecasts that a cold snap in Europe and the United States would be short-lived also weighed on prices.

“I would think that we are going to retest the lows…the market will be most severely tested in February, March and April when we get Iranian crude and we have refinery maintenance”.

But the prolonged slump in oil prices contributed to Saudi Arabia’s own record budget deficit of 367 billion riyals ($97.9 billion) in 2015, the country’s Council of Economic and Development Affairs said on Monday, prompting the oil-rich country to unveil spending cuts in its 2016 budget, including slashing energy subsidies for Saudis. Apple Inc (LSE: 0R2V.L – news), the most valuable public U.S (Other OTC: UBGXF – news). company, exerted the biggest drag on the Standard & Poor’s 500 index, ending the day 1.3 percent lower, in what would be the stock’s first down year since 2008. The price of gas at the pump is expected to drop to $2.36 a gallon in 2016 from a high of $3.36 in 2014.